American Furniture Manufacturing Case Study

About

Company:

American Furniture Manufacturing (“AFM”) was one of the country’s largest manufacturers of residential upholstered furniture focused exclusively on promotional price points.

Background:

AFM was a very rapidly growing business, having achieved $100 million in revenue in just four years. The company’s CEO/Founder was eager to diversify his personal wealth while partnering with a private equity firm who could help him professionalize the company’s systems and processes.

Investment Date: September 2001

Investment Status: Exited June 2004

Fund Equity Invested: $7.2 million

Process Type: Negotiated after introduction by a broker

Portfolio Team: James Donnelly, Calvin A. Neider

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Post Acquisitions Initiatives

Management Augmentation:

Recruited an experienced CFO to build a finance department to replace an outsourced function.

Organic Growth:

Double productive capacity and warehouse space by expanding an existing facility and purchasing a new facility.
Introduced a complete motion upholstery line to complement the company’s stationary product lines.
Expanded trucking fleet to meet demand.

Tracking Critical Metrics:

Prior to acquisition worked with a national accounting firm to perform the first ever financial audit of the company.
Brought all financial functions in house, including payroll.
Implemented management systems which were non-existent at acquisition.
Implemented product costing.